Korea's economy is under increasing strain, with signs of a slowdown growing more evident as the world prepares for the potential second presidency of Donald Trump. Anticipated turbulence from his policies has already unsettled global financial markets, leaving Korea facing a variety of challenges that threaten its economic stability. A rapidly depreciating won, slow growth, and limited job creation are all highlighting the nation's vulnerabilities. The government must respond swiftly to manage these risks and protect the future of the national economy.

One of the most pressing concerns is the depreciation of the Korean won against the U.S. dollar, which recently surpassed the 1,400-won mark for the first time in two years. This is a significant threshold, last seen during the financial crises of 1997, 2002, and 2008, when Korea's economy was severely impacted by external shocks. The rapid decline of the won reflects widespread apprehension about U.S. economic policies under Trump, anticipated to be protectionist and inflationary. This currency depreciation, along with the soaring U.S. dollar, threatens to undermine Korean exports, particularly in vital sectors like semiconductors and batteries, on which the country heavily relies.

Adding to market instability is the "Trump trade" phenomenon — a term describing the market's response to the U.S. policies anticipated during the Trump administration, such as tariff impositions, tax cuts, and anti-China measures. These policies could directly impact Korea's export-driven economy. Sensing opportunity, investors are redirecting their focus toward assets that might benefit from such policies, including U.S. stocks and cryptocurrencies. However, this trend has clear drawbacks: the Korean won continues to lose value, and the country's stock market has hit new lows, with the benchmark KOSPI index experiencing substantial declines.

These external pressures come at a time when Korea's internal economic landscape is far from rosy. Despite claims by the government that the economy is showing signs of a recovery, many Koreans face a grim reality. Inflation is rising, growth is stagnating, and employment figures remain weak. According to the Korea Development Institute (KDI), the country's growth rate is expected to fall below 1 percent — a far cry from its potential growth rate. This is partly due to the anticipated tariffs and the ripple effects of Trump's protectionist policies. The Bank of Korea has also reported a sharp rise in the import price index, which reflects higher costs of raw materials and consumer goods, placing additional strain on households.

Job creation, a key indicator of economic health, has also fallen short of expectations. Statistics Korea revealed that only 83,000 jobs were created in October, far below the government's target of 230,000. This downturn reflects a broader economic stagnation, as businesses remain cautious about investing or expanding. According to the Federation of Korean Industries (FKI), nearly 80 percent of companies have reported a decline in sales, and overall business investment has dropped by 8.3 percent — the first such decline since 2020. These troubling indicators suggest that the real economy is struggling, despite the government's optimistic assurances.

Korea's challenges are further intensified by a complex global landscape. Should the Trump administration proceed with its proposed tariffs and protectionist policies, Korean exporters — particularly in the semiconductor sector, a major contributor to the nation's exports — will face significant setbacks. Simultaneously, the rising costs of imported goods, worsened by a weakened won, will amplify inflationary pressure, reducing consumer spending and cooling the job market even further.

In light of these developments, the Yoon Suk Yeol administration must take decisive action to mitigate the risks posed by Trump's presidency. This includes adopting flexible monetary policies to respond to market volatility, ensuring that government budgets are used effectively to support struggling sectors, and implementing targeted fiscal stimulus measures. Additionally, structural reforms are urgently needed to bolster Korea's manufacturing and service sectors. Deregulation, innovation, and investments in high-tech industries, like artificial intelligence and semiconductors, must be prioritized to boost productivity and global competitiveness.

The political establishment, irrespective of party lines, must also focus on passing legislations that support economic resilience. This includes creating an environment that fosters investments, accelerates technological advancements, and addresses critical labor market challenges. Listening to the concerns of households and businesses alike is crucial to creating policies that will have a tangible impact on an economic recovery.

The government must act decisively to shield the country from further economic hardships. By focusing on reforms, innovation, and strategic fiscal management, Korea can weather the storm and emerge stronger, but only if the right policies are put in place before the challenges deepen.